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As Coronavirus Spreads, Here’s How Global Stock Markets Are Being Impacted

Global stocks continued to feel the effects of coronavirus on Thursday, with Asian markets faring the worst.

The Shanghai Composite Index closed down 2.75% today, the worst single-day drop since President Donald Trump threatened new tariffs on China eight months ago. Meanwhile, the Hang Seng Index was down by 1.52%, while Japan’s Nikkei 225 benchmark slid by 0.98%.

First detected in the large central Chinese city of Wuhan this December, the coronavirus has so far infected over 570 people, with 17 dead, according to the latest report from authorities. The illness, which causes pneumonia-like symptoms, has spread outside China to countries including Thailand, Japan, South Korea and the U.S.

So far, at least five Chinese provincial cities have restricted transportation, including Wuhan, where public transport is on lockdown. Wuhan is a commerce hub of central China with a population of 11 million that sees 30,000 travelers daily, according to air traffic data.

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As of 10 a.m. ET, the U.S. benchmarks were about flat. The Dow Jones fell by 0.32%, the S&P 500 dropped .28% and the Nasdaq Composite was down 0.14%.

The travel bans come amid expectations of widespread travel throughout East Asia this weekend for the Lunar New Year. In addition to travel restrictions, large-scale Lunar New Year festivities in several major Chinese cities, including Beijing, have been canceled. The World Health Organization is meeting today to determine whether to declare an international public health emergency.

As the coronavirus alters travel plans, stocks in major hotel and airline chains have fallen. Retail and luxury goods stocks are also down. As of 10 a.m. ET, LVMH shares have dropped 1.82%, Burberry stock — the firm also released earnings on Wednesday, signaling negative impacts from ongoing Hong Kong protests — has slid 2.53% and Kering shares are trading down 3.31%. In contrast, medical supply and pharma stocks are seeing gains, with Zhende Medical, Shanghai Kehua Bio-Engineering and Shandong Lukang Pharmaceutical up by their 10% daily limit.

Should the virus continue to spread, it remains to be seen if the luxury sector could take a hit. At present, the Chinese market accounts for a significant portion of all sales in the sector. According to Bain & Co., Chinese shoppers represent 35% of global luxury goods sales — and they accounted for 90% of growth in the sector in 2019.

As China deals with the coronavirus outbreak, Hong Kong, a semi-autonomous region of the country, continues to face ongoing anti-government protests, which have resulted in an economic recession due in part to decreased tourism and slumping retail sales. Hong Kong’s retail industry saw sales plummet 23.6% in November for the 10th consecutive month of declines, according to government data, and the Hong Kong Retail Management Association expects around 5,600 workers to be laid off amid cutbacks and store closings.

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